KeyBanc reports it
and United Auto Workers have reached a preliminary agreement to end the strike and a deal may be announced Wednesday.
There should be good news for GM stocks, which have been hanging around the market since the strike began. General Motors (ticker: GM) shares have fallen nearly 7% over the past month, while
Dow Jones industrial average,
by comparison has been flat. The 30-day work stoppage, which entered its fifth week Monday, is the longest walkout since 1970.
General Motors declined to comment, while the union said no preliminary agreement was reached, which members would ratify by ballot. GM shares rose 1% Wednesday morning after rising 2.1% Tuesday.
Both sides said the conversations continue.
"We are trying to provide a way for our temporary workers to become workers [permanent]," UAW Vice President Terry Dittes said in a recorded message to members on Monday. It also said it increased members' strike pay to $ 275 from $ 250l.
"Although the ratification can take up to an extra week … we estimate that GM lost 25 production days, or 250,000 to 200,000 units, representing the third quarter and fourth quarter of North American industrial production at 2, 5% and 4.4%, respectively, "KeyBanc analyst James Picariello wrote in a research report Wednesday.
The effect on his 2019 earnings estimates ranges from really nothing – in the case
(BWA) – to 25% cut for
American Axle & Manufacturing
(AXL). He estimates Axle's earnings will fall from $ 1.90 per share to $ 1.57 per share in 2019, based on output lost due to the strike. The average impact on parts of supplier earnings is about 5%; it correlates with the suppliers' overall exposure to General Motors.
Investors should be ready for weak earnings in the third quarter as car companies begin to report their numbers next week.
"Many [suppliers] are likely to cut the guidance in 2019, [which] investors can review," wrote Credit Suisse analyst Dan Levy in a research report on Friday.
"Initially, we would not be surprised if the group is suing for a GM / UAW resolution given some clarity," added RBC analyst Joseph Spak in a Sunday survey report.
GM reports the third quarter numbers on October 29.
Write to Al Root at email@example.com